OK So I am interested in people's thoughts on Sydney suburbs that are currently under priced or have some doer upper bargains going .
My purpose:
I have some investing partners with itchy feet so we are looking at some buy-renno-sell or buy-renno-refinance deals in the next few months.
Me: I have a number of shorter and longer term deals under my belt, 5 myself and another 8 where I have had differing levels of input for family and friends. Still consider myself a newbie and small fry but keen to improve. My cash flow is tight so no deals on my own for a while, 4 young kids, newly finished 5br home build for us and carrying plenty of debt means we are stinky to the banks! Several who know me and have seen the results want to JV, with their capital and my time to put the deal together in a sort of 50/50 split. I am looking primarily at Sydney as it’s a big market and if the deal is done right I am hoping to either find a buyer quickly or obtain a solid refinance to access some equity if the partners decide to rent out. I could also look at other areas (Gladstone is one area I am already in and 2012 should be ok year) but want safe, big, diversified markets to rinse and repeat deals as opposed to a small booming town where I can do 1 or 2 then get priced out. For now immediate CG is the priority above yield but obviously both are important factors.
I have a bit of a cosmetic reno formula going that I have used a few times, looking to perfect this.
Criteria House:
*Free standing home on own block, land size not vital but imo generally more is better.
*Brick and tile preferably or clad if has metal roof if a complete repaint would bring it into the new millennium (not fibro unless the deal is amazing) brick and color bond roof ok too. (just do
*3-5 bedrooms, the more space the better as long as its cheap.
*Single story probably but not essential (no scaffolding if bagging/rendering the bricks)
*Garaging or room to build carport, improve driveways etc.
*I like properties that are jungles, cutting back is the easiest way to improve street appeal
*Small amount of fire or termite damage ok but no complete rebuilds
*I replace kitchens, floor coverings, paint, bathroom tiles/shower screens/vanities light fittings etc
*I love landscaping as much as possible to improve outdoor useability and appeal
Criteria Deal:
I will have cash for purchase to trying to obtain best possible price and terms if available like pre settlement access for start of rennos etc, a fantastic purchase price is obviously the main driver for a deal like this so no subject to finance clause.
In terms of building and pest inspections I don't buy without them but if the deal looked good enough and market was quiet I would do them prior to offer to have a cash unconditional offer making a low price offer as attractive as possible to someone who is motivated to sell.
JV - as I said 50/50 split with a money partner, I do all the work for the deal and the renno (project managing with most of work done by others but I have been known to get dirty myself when needed to keep renno on time/budget. Structure for the JV is still hazy looking at some options - happy to hear where I can find good eg JV agreements as currently we will be paying a solicitor to draw one up.
PROFIT (the main issue) - partner and I want to try and safely make 10% each, so net 20% profit from substantial but primarily cosmetic (trying to avoid huge extensions or big structural work) renovation.
MARKET (2nd to main issue) - can go higher later but for this deal probably aiming at not much more than 320k for a purchase price and based on my previous deals and everything I read approx 10% renno cost maximum. I am used to doing a house over for around 20k so don't imagine cost blowouts to be a problem. At this price I know I am probably gonna being in middle to outer western Sydney. (with the emphasis on outer)
Sample numbers
300k purchase (hoping to buy 5-10% below comparables if motivated vendor and cash offer are worth something. So maybe its worth 320k
Allowing 5% purchase costs, so cost base is now 315k
up to 30k renno, eg kitchen, bath, floors, paint, lights, blinds, bag or render/paint bricks, landscape etc cost base is now 345
Refi or sell for 410-425 to create approx 10% equity profit each to split
For the purpose of this please ignore capital gains tax as this will be dealt with after the profit split, and yes I am well aware of the cg implications of immediately selling vs hold 12 months vs holding forever.
Can it be done in today's market?
What suburbs do you think I should focus my attention?
Is there somewhere outside of Sydney I should be thinking of instead.
I guess after reading what I have written I think what I am looking for is a suburb that is bordering more expensive suburbs, that itself has a median house price well above 300k, maybe close to 400k if possible but a few really ugly ducklings left that I could target.
Cultural issues are not a problem, and happy to reno to the taste of who ever is buying in that suburb if that adds desirability.
Anyway, appreciate your advice.
My purpose:
I have some investing partners with itchy feet so we are looking at some buy-renno-sell or buy-renno-refinance deals in the next few months.
Me: I have a number of shorter and longer term deals under my belt, 5 myself and another 8 where I have had differing levels of input for family and friends. Still consider myself a newbie and small fry but keen to improve. My cash flow is tight so no deals on my own for a while, 4 young kids, newly finished 5br home build for us and carrying plenty of debt means we are stinky to the banks! Several who know me and have seen the results want to JV, with their capital and my time to put the deal together in a sort of 50/50 split. I am looking primarily at Sydney as it’s a big market and if the deal is done right I am hoping to either find a buyer quickly or obtain a solid refinance to access some equity if the partners decide to rent out. I could also look at other areas (Gladstone is one area I am already in and 2012 should be ok year) but want safe, big, diversified markets to rinse and repeat deals as opposed to a small booming town where I can do 1 or 2 then get priced out. For now immediate CG is the priority above yield but obviously both are important factors.
I have a bit of a cosmetic reno formula going that I have used a few times, looking to perfect this.
Criteria House:
*Free standing home on own block, land size not vital but imo generally more is better.
*Brick and tile preferably or clad if has metal roof if a complete repaint would bring it into the new millennium (not fibro unless the deal is amazing) brick and color bond roof ok too. (just do
*3-5 bedrooms, the more space the better as long as its cheap.
*Single story probably but not essential (no scaffolding if bagging/rendering the bricks)
*Garaging or room to build carport, improve driveways etc.
*I like properties that are jungles, cutting back is the easiest way to improve street appeal
*Small amount of fire or termite damage ok but no complete rebuilds
*I replace kitchens, floor coverings, paint, bathroom tiles/shower screens/vanities light fittings etc
*I love landscaping as much as possible to improve outdoor useability and appeal
Criteria Deal:
I will have cash for purchase to trying to obtain best possible price and terms if available like pre settlement access for start of rennos etc, a fantastic purchase price is obviously the main driver for a deal like this so no subject to finance clause.
In terms of building and pest inspections I don't buy without them but if the deal looked good enough and market was quiet I would do them prior to offer to have a cash unconditional offer making a low price offer as attractive as possible to someone who is motivated to sell.
JV - as I said 50/50 split with a money partner, I do all the work for the deal and the renno (project managing with most of work done by others but I have been known to get dirty myself when needed to keep renno on time/budget. Structure for the JV is still hazy looking at some options - happy to hear where I can find good eg JV agreements as currently we will be paying a solicitor to draw one up.
PROFIT (the main issue) - partner and I want to try and safely make 10% each, so net 20% profit from substantial but primarily cosmetic (trying to avoid huge extensions or big structural work) renovation.
MARKET (2nd to main issue) - can go higher later but for this deal probably aiming at not much more than 320k for a purchase price and based on my previous deals and everything I read approx 10% renno cost maximum. I am used to doing a house over for around 20k so don't imagine cost blowouts to be a problem. At this price I know I am probably gonna being in middle to outer western Sydney. (with the emphasis on outer)
Sample numbers
300k purchase (hoping to buy 5-10% below comparables if motivated vendor and cash offer are worth something. So maybe its worth 320k
Allowing 5% purchase costs, so cost base is now 315k
up to 30k renno, eg kitchen, bath, floors, paint, lights, blinds, bag or render/paint bricks, landscape etc cost base is now 345
Refi or sell for 410-425 to create approx 10% equity profit each to split
For the purpose of this please ignore capital gains tax as this will be dealt with after the profit split, and yes I am well aware of the cg implications of immediately selling vs hold 12 months vs holding forever.
Can it be done in today's market?
What suburbs do you think I should focus my attention?
Is there somewhere outside of Sydney I should be thinking of instead.
I guess after reading what I have written I think what I am looking for is a suburb that is bordering more expensive suburbs, that itself has a median house price well above 300k, maybe close to 400k if possible but a few really ugly ducklings left that I could target.
Cultural issues are not a problem, and happy to reno to the taste of who ever is buying in that suburb if that adds desirability.
Anyway, appreciate your advice.